Mutual Fund is a investment type that uses a pool of money from numerous investors to invest in stocks, bonds or any other type of securities. It is a professionally managed investment scheme run by an Asset Management Company (AMC) where a Fund Manager takes all the investment decisions.

Funds are generally of 3 types:

Open Ended Funds - Can be bought and sold at anytime. There is also no limit on the number of units the fund can issue, so if more investors buy into funds more units are issued. All the transactions take place on the Net Asset Value (NAV).

Close Ended Funds -
There are fixed number of units that are issued during the IPO and trade only on the exchange. They trade just like stocks.

Exchange Traded Funds (ETF) -
Exchange Traded Funds also trade like stocks on the exchange but the movement is replicated based on the underlying asset like Index, Gold, Oil etc.